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General Medical Billing vs Anesthesiology Billing in the Hospital

Hospitals nationwide are experiencing changes throughout their entire infrastructure and procedures. With new safety protocols, practice management changes, regulation rules, new billing methods and ever-changing tax laws, hospitals are experiencing a lot of uncertainty and pressure. On top of that, hospitals are also dealing with the increasing costs of bundled Medicaid payments, increasing costs of staff, increasing costs of supplies, and increasing drug prices. Now more than ever, hospitals need to pay particular attention to their billing processes. It is imperative to produce the maximum revenue, reduce any liability risk, while ensuring that they stay competitive in the health systems market. Within the hospital, anesthesia and its billing practices have undergone significant changes over the years. It’s a big job for a hospital to try to manage all of these constantly evolving aspects of their business.

Many hospitals attempt to ease the burden in the billing department by grouping all the specialties within the hospital together and outsourcing to a general medical billing company. These general medical billing companies are designed to generally maximize revenue across the departments. In general, this works. However, anesthesiology has very specific specialties and unique billing procedures. The generalized billing services are not optimized for anesthesiology, which means they are not collecting as much as they should or could be collecting. This equals a loss of revenue for the anesthesiology department. Throughout the years, general medical billing companies have been sued for billing errors in their anesthesiology department, that equal hundreds of millions of dollars of lost revenue. In addition to loss of revenue, generalized medical billing services risk regulatory compliance problems and allegations of fraud when general coders try to handle the complex work of anesthesia billing without the specialized software or anesthesia coding skills.

Even top of the line billing companies with experts in medical billing will fail in anesthesiology billing if they do not have a deep understanding of the specifics of anesthesia billing. Anesthesia coders should be certified by the AAPC. They need to know every modifier type, qualifying circumstance, physical status modifier, and have a complete understanding on how to calculate time for anesthesia services. They need to have specialized training with the anesthesiology billing procedures.

While anesthesia billing is quite a complex process, most charges are typically calculated using four different factors:1

  • Base Unit: The base unit assigned to the procedure by the ASA. This is used to establish the base fee.
  • Time Unit: Anesthesia is billed considering both the base unit and the time that the practitioner is with the patient. One-time unit is typically 15 minutes in length, but this could differ depending on the location.
  • Modifying Factor: Not all procedures will contain a modifying factor. This is where special conditions that affect the anesthesia plan can be accounted for. Patient health is a typical modifier.
  • Conversion Factor: This helps you translate the base unit into dollar amounts. This will be different for each provider and location.

Put simply, the general formula for calculating anesthesia charges is:

(Base Unit + Time Unit + Modifying Unit) * Conversion Factor = Anesthesia Charge

However, billers must be very careful when coding for anesthesia billing. One general medical billing company was recently sued due to inappropriately charged anesthesia billing. Seemingly, a 30-minute, 4 base unit procedure was being incorrectly billed at 34 units (4 base units + 30 minutes), rather than correctly billed at 6 units (4 base units + 2 time units). This caused numerous clients to be fraudulently double billed to Medicare and Medicaid by hundreds of millions of dollars. A simple algorithm programming error within the medical billing company resulted in this massive

Anesthesia billing is unique and complex. In order to maximize the revenue in your anesthesiology department and reduce liability, partner with an anesthesia billing specialist. Anesthesia billing specialists, who focus 100% on anesthesia, have the right people who are specialized in anesthesia billing, the right software, the ability to go through your contract line-by-line and reconcile the contracted amounts, and are able to maintain a deep level of understanding with the constantly evolving laws, regulations, code changes and tax rules. It’s a big job, and can only be done properly by dedicated anesthesia billing specialists. At Fusion Anesthesia, we typically see a 5-15% increase in revenue when anesthesiology departments switch to Fusion Anesthesia compared to their in-house billers or their general medical billing companies.

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